Mining Stocks Rise, Moving in Line With Gold Commodity Futures; Silver Prices Also Post Gains
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DENVER (AP) -- Mining stocks rose Wednesday, moving in line with gold commodity futures that jumped $10 an ounce to close above $479 -- its highest level in more than a month.
Silver prices closed above $8 an ounce Wednesday for the first time since December 2004.
Continuing strong gold demand from Asia, weaker oil prices, inflation concerns and central bank buying were all combining to lift gold, analysts said.
Douglas Silver, chairman and chief executive of International Royalty Corp. of Denver, said recent forecasts that the largest mining companies' production is declining was likely also driving gold prices higher.
On the New York Stock Exchange, Denver-based Newmont Mining Corp., the world's largest gold producer, closed up $3.01 at $46.05; Toronto-based Barrick Gold Corp. closed up $1.22 at $26.49; Vancouver-based Placer Dome Inc., closed up 80 cents at $20.87; and New Orleans-based Freeport-McMoran Copper & Gold closed up $1.97 at $51.80.
Platinum and palladium producer Stillwater Mining Corp. of Billings, Mont., got a boost from a jump in those metals prices Wednesday on forecasts of increasing demand from auto makers for catalytic converters. The shares closed up $1.06, or 11 percent at $11.20 on the NYSE.
Bullish gold sentiment came out of the London Bullion Market Association conference in Johannesburg, South Africa, this week, analyst Silver said.
Sandy McGregor, a fund manager with Allan Gray Ltd., was cited in media reports out of the conference saying that the world's largest gold producers are "trying to run up a down escalator" in terms of replacing their gold production.
"If this proposition is true, which it is ... then mining companies and gold become that much more precious because of the shortfall in production relative to demand," Silver said.
If the biggest gold companies are having a hard time maintaining their high production, he said, "there will be a shortage of gold globally. It also means other (smaller) mining companies will become takeover targets."
Silver cited Newmont Mining's announcement Wednesday that it was acquiring a 9.9 percent stake in Miramar Mining Corp. as a sign of what's to come with big mining companies, desperate to boost their production numbers.
"The big companies are positioning themselves ... to somehow accelerate consolidation in the business," he said.
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